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Monday, June 30, 2014

What Are You Really Worth?

Compensation is a big factor in deciding to stay where you are or make a move to another organization.  Most people, most of the time, do whatever they have to do to avoid change.  That reluctance may be costing them dearly.

The conventional wisdom of the generations that came of age in the mid 1900's through the end of the last century was that the key to success was to get a good job, stay with the organization until you retired, then ride off into the sunset with a nice watch that they gave you at your retirement party.

Things have changed considerably since the turn of the century.  The main driving force behind these changes has been the rapid and unrelenting impact of technology.  No longer is it an unwritten rule that you have to "pay your dues" and work your way up slowly to a comfortable level of income...and "comfortable" can be defined in many ways.

Today, there are young people in their 20's and 30's who are starting and running companies without having paid any dues, anywhere.  If you have a "value proposition"...a particular skill that is in demand in the market...you have the power and the freedom to market that skill in your own business, or to go wherever someone will pay you for it in excess of what someone is paying you now.

If you prefer stability and choose to stay where you are, you can expect, on average, salary bumps of 3% to 5% annually.  If you are open to change, you may find that someone else will pay you for your skills at a rate that can be 15% to 25% higher than where you are now.

Businesses are not interested in paying someone the same as the value they bring to the organization. They want the value to exceed the compensation.  So consider that if you are getting paid a salary of $60,000...the business will expect, on average, a 40% return on investment they are making in you.  They will expect that you will provide at least $100,000 in value for the $60,000 they pay you for your services ($60,000/.6...divide the compensation by the reciprocal of the desired return on the investment).

So next time you're thinking, "I'm worth more than what I'm getting paid here," you're probably right.  You are much more likely to realize and get paid your extra value by moving to another organization than you are by staying where you are.

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